Trademark Law - Extraterritorial Application of the Lanham Act Saves an American Brand from a Canadian Retail Pirate

TRADEMARK LAW--EXTRATERRITORIAL APPLICATION OF THE LANHAM ACT SAVES AN AMERICAN BRAND FROM A CANADIAN RETAIL PIRATE--Trader Co. v. Hallatt, 835 F.3d 960 (9th Cir. 2016). The Lanham Act sets out the fundamental requirements that must be met by an individual or business to determine whether a trademark is infringed. (1) A foreign business that infringes an American company's trademarks raises the question of international trademark protection. (2) In Co. v. Hallatt, (3) the United States Court of Appeals for the Ninth Circuit was confronted with whether a competitor, selling products in Canada under the name Pirate Joe's, generated a connection to American commerce strong enough to warrant extraterritorial application of the Lanham Act. (4) The Court held that Pirate economic activity does create a necessary connection to American commerce sufficient to permit extraterritorial application of the Lanham Act. (5) In October 2011, employees at the Bellingham, Washington, store noticed Canadian resident, Michael Norman Hallatt, visiting the store three to five times per week to buy large amounts of (6) When questioned by employees, Hallatt admitted that he drove the goods he purchased across the Canadian border where he sold them to Canadian customers at Pirate Joe's. (7) Hallatt owns and operates Pirate Joe's, a themed store in Canada, where he resells goods purchased in Washington State at substantially inflated prices. (8) Hallatt displays an exterior sign at Pirate that uses a font similar to the trademarked Trader Joe's sign. (9) informed Hallatt that it does not tolerate his activity and demanded that he stop reselling products at Pirate Joe's, nonetheless, Hallatt refused. (10) Trader declined to serve Hallatt as a customer, however, he began donning disguises to shop at without detection and driving to Seattle, Portland, and even California to purchase branded products. (11) sued Hallatt, the owner of Pirate Joe's, for trademark infringement in the Western District of Washington State. (12) alleged that Hallatt violated the Lanham Act by misleading consumers into believing Pirate is authorized to sell Joe's-branded (13) asked the court to award it damages and permanently enjoin Hallatt from reselling its goods using its trademarks in Canada based on (1) federal trademark infringement, (2) unfair competition, false endorsement, and false designation of origin, (3) false advertising, and (4) federal trademark dilution. (14) The district court granted Hallatt's motion to dismiss for lack of subject-matter jurisdiction, holding that the Lanham Act did not apply to Hallatt's reselling of products in Canada, consequently, appealed. (15) On appeal, the Ninth Circuit reversed, concluding that Hallatt's conduct does create a connection to American commerce sufficient to warrant extraterritorial application of the Lanham Act. (16) The Lanham Act is the primary federal trademark act in the United States which prohibits a number of activities, including trademark infringement, trademark dilution, and false advertising. (17) To determine whether the Lanham Act reaches foreign conduct, a two part test must be applied. (18) Step one considers whether the statute applies extraterritorially its face, and step two considers the limits Congress has imposed the statute's foreign application. (19) With regard to the first step, the Supreme Court of the United States held that the Act's broad language with respect to commerce clearly indicates Congress' intent that it apply extraterritorially. (20) Furthermore, the Lanham Act only applies to foreign conduct that impacts American commerce. (21) In considering the second step, note that Congress has not imposed many limits the Lanham Act's extraterritorial application and therefore the limits of the Act must be analyzed through precedent that has previously been applied to the Sherman Antitrust Act. …

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